Matrix, Inc

question 253

Multiple Choice

Matrix, Inc. currently has sales of $39,600, variable costs of $28,730, and fixed costs of $8,280. If the company installs a new piece of equipment, the variable costs are expected to increase to
$34,970 and the number of units produced will increase from 2,800 to 4,100. What is the minimum
Price the company can accept for each of the additional units if they want to maintain their current
Level of net income?

• A) $1.52
• B) $4.80
• C) $5.73
• D) $6.82
• E) $10.55

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Definitions:

Monopolist

An individual or firm that holds a monopoly in a particular market, having exclusive control over the supply of a good or service and, therefore, substantial market power.

Cournot Model

An economic model describing an industry structure in which companies compete on the amount of output they will produce, which they decide independently and at the same time, leading to a state of equilibrium.

Maximize Profits

The process or strategy employed by businesses to increase their net earnings to the highest possible level.

Cartel

An association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.